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Carly Fiorina’s record at Hewlett-Packard, by the numbers

Carly Fiorina speaks with the media after meeting with Trump on Dec. 12, 2016. Credit: REUTERS/Shannon Stapleton

President-elect Donald Trump is reportedly considering his former rival Carly Fiorina for the role of director of national intelligence.

When she was running against Trump for the Republican nomination, Fiorina often alluded to her experience as CEO of Hewlett-Packard (HPQ). Now that she’s being considered for a top role in the Trump administration, it’s worth looking into her tenure at HP — then the 11th biggest company in the US.

In the past, Fiorina has pointed out that she achieved “doubled revenues” during her time at the company and used her HP experience to attack Hillary Clinton, saying, “I’m very proud of our record. We went from a market laggard to market leader. Unlike Hillary, I have actually accomplished something.”

How exactly does Carly Fiorina’s tenure at HP—where she was CEO from July 1999 until she was fired in February 2005—stack up? It’s true that HP was flagging when Fiorina came on board. And you can find a few Carly defenders out there: Bob Knowling, who was on HP’s board of directors during Fiorina’s tenure, told CNN last year that, “Contrary to what has been written in terms of a lot of negative things, she did what she was hired to do and that was to lead a transformation.”

Another person close to the company says: “She certainly does not deserve all the blame, there is plenty to go around, and you could argue that no one could have saved HP from its decline from a once great company.”

Much more frequently though, the informed commentary is less flattering: “She was polarizing [and] disenfranchising,” a top HP executive, who joined the company immediately after Fiorina left, told Yahoo Finance last year.

“She was a value destruction machine with near zero cultural sensitivity,” says a top tech CEO. “Carly self excused the barrage of criticism by saying it all came with her necessary role as a change agent. I guess history doesn’t welcome all saviors. The [Silicon] Valley opinion was universally and viscerally negative. I literally don’t know a single person who thinks she was great and unfairly treated.”

HP track record

Fiorina has her picture taken with singer Gwen Stefani at the 2005 International Consumer Electronics Show in Las Vegas, January 7, 2005. REUTERS/Mike Blake

Fiorina, 62, did try to restructure HP and execute a mega-merger with Compaq, which set off a bloody proxy fight, pitting her against Walter Hewlett, son of company co-founder Bill Hewlett. She ended up laying off thousands of employees and tried to push the company’s staid culture forward into the internet era. It’s neither surprising nor conclusive that a woman CEO in those circumstances would be targeted with unattributed, qualitative criticism.

The best way to judge Fiorina’s tenure then, and by extension, her potential to direct national intelligence for the US, is to simply take a dispassionate look at the numbers. It comes down to a version of the old Ronald Reagan question: Was HP better off after Carly left than when she arrived? The answer is no.

The signature saga of Fiorina’s time at HP was the tortuous purchase of rival PC maker Compaq carried out in May of 2002. That’s what set off the bitter proxy battle with Walter Hewlett, which Fiorina ultimately won. The crux of the Compaq deal (spelled out in great detail in an award-winning Fortune Magazine 2005 cover story “Why Carly’s Big Bet is Failing” written by Carol Loomis) is that HP issued 1.1 billion shares of stock to Compaq shareholders, which were added to HP’s existing 1.9 billion shares, meaning that HP sold 37% of its assets to Compaq shareholders.

The crown jewel of HP has long been its high-margin printer business. To follow that math, before the merger the old HP shareholders owned 100% of that business. After the merger they owned 63%. Meanwhile, by buying Compaq, HP was essentially doubling down on PCs, a much lower margin business. Why would HP want to do that? Fiorina said at the time that HP needed scale in PCs, servers and storage.

After the 2002 merger the company’s results suffered. Yes, Fiorina did double HP’s revenues by buying Compaq, but at what cost? Let’s take a look at the numbers. In 1999 when she arrived at the company, HP had $42 billion in sales and $3.1 billion in net earnings. When she left in 2005, HP had $87 billion in sales but only $2.4 billion in earnings.

In subsequent years HP would become more profitable—to a large degree due to cost cutting by her successor as CEO, Mark Hurd—but the company would never become the moneymaking juggernaut Fiorina promised. Why is that? To a large degree it’s because HP basically traded a slice of its high-margin printer business for a larger share of the lower-margin PC business. For example, in 2004, after the merger and before Fiorina left the company, HP’s printer business produced $24 billion in sales and $3.8 billion in profits, while PCs produced $25 billion in sales, but only $210 million in profits.

Betting on PCs

Mark Hurd peaks at the Fortune Brainstorm Tech conference in Pasadena, California July 24, 2009. REUTERS/Fred Prouse

This decision to accentuate the PC business dogs HP to this day. Yes, its market share in PCs leaped from 6% to 13% after the merger (according to Gartner data), and is up to 19% today, but the PC business is as bereft of profits as ever and even worse, over the past several years has been declining as customers switch to tablets and smartphones. (HP still has about a 40% share of the worldwide printer market—roughly where it was when Fiorina left—but again that business is now a much smaller piece of the overall company.) Flash forward to last year, when HP had $111 billion in sales and $5 billion in net income. So 16 years after Fiorina became CEO, HP’s sales grew by 164%, while earnings climbed only 61%.

And what about the ultimate measure of a company’s performance, the stock price? Initially during Fiorina’s run, the stock paced ahead of the market, but shares soon fell sharply and stayed down until she was dismissed. The bottom line is that HP’s stock declined some 50% during Fiorina’s tenure while the overall market, as measured by the S&P 500, fell 7% (according to FactSet cumulative return data).

And how about HP’s cohort? How did they perform in that time frame? The answer is not as badly or much better. IBM (IBM) was off 27%, while archrival Dell was roughly flat. HP’s chief printer competitor, Lexmark was up 30%. Apple (AAPL), well into the Steve Jobs renaissance—he came back to the company in July of 1997, exactly two years before Fiorina arrived at HP—saw its stock triple in those five-and-a-half years. HP’s stock did have one decidedly strong spurt in the Carly era, soaring 6.9% the day after she was terminated.

It’s true that other top executives in HP’s recent history have had their own problems. The company appears to be snake bit in the leadership department. Subsequent to Fiorina’s tenure, HP’s then-chairman, the late Patricia Dunn, was implicated in a scandal where reporters were spied on. The aforementioned Mark Hurd was forced out after the HP board investigated him for expense report irregularities and sexual harassment charges by an HP contractor. (In Hurd’s case, HP’s stock fell sharply the day he was ousted.)

Hurd’s successor, Leo Apotheker, lasted 10 months before he too was pushed aside after an ill-fated acquisition of British software company Autonomy for $11 billion. HP had to take an $8.8 billion charge related to accounting issues at the company. As for Meg Whitman who came on board in September of 2011, HP’s stock underperformed the market during her tenure.

In November 2015, HP completed a spin-off of Hewlett Packard Enterprise Co., which focuses on providing information technology to businesses. Whitman is now CEO of Hewlett Packard Enterprise, and Australian-born businessman Dion Weisler is CEO of HP Inc. (They have separate ticker symbols, HPQ for Hewlett Packard Inc., and HPE for Hewlett Packard Enterprise.)

If Trump does tap Fiorina as director of national intelligence, she would not be the only business leader to assume a foreign policy position in his administration. Just Tuesday, Trump nominated ExxonMobil CEO Rex Tillerson to be secretary of state. Indeed, Fiorina may even be qualified to direct America’s national intelligence, but not based on her time running HP.

Andy Serwer is editor-in-chief of Yahoo Finance, and Tae Kim is an investing journalist at CNBC.

An earlier version of this article ran in April 2015.